The ongoing COVID-19 crisis has certainly introduced some change sin the precious metals industry. It now appears that recycled gold and silver will see a [temporary] surge in demand, at least where Pandora A/S is concerned.
A Surprising Decision by Pandora A/S
Being the world’s leading jewelry firm is all fine and dandy, until something like COVID-19 pops up. Not only has it reduced the demand for jewelry by a significant margin, but the production of precious metals is also affected. It creates a very interesting situation, but one that forces companies to rethink their business strategy altogether.
It now appears that Pandora A/S is doing exactly that. Instead of relying on the production and delivery of new gold and silver, the company is taking a different approach. It will begin using more recycled precious metals to produce future jewelry.
Some may see this as a positive circular economy development, but it also sets a certain industry-wide tone that cannot be ignored. Producers of precious metals do not need to despair just yet. Pandora A/S has confirmed that this new policy won’t go into effect until 2025.
According to the Danish company, now is the time to rethink its impact on climate. During the COVID-19 pandemic, several potential hindrances have become apparent. Reducing all of these risk factors is of the utmost importance to guarantee that the company has a future.
In terms of carbon emission, Pandora is confident that it can reduce its output in a meaningful manner. Projections indicate a 66% decrease for silver, and a 99% reduction for gold. Precious metals dug up and utilized centuries ago are still as good as new today. They do not deprecate in any way, making the choice for recycled metals a logical one.
Shareholders and stock traders are seemingly impressed with the news. Pandora’s stock jumped by roughly 5% when the news became public knowledge. It is not the first time the company’s stocks appreciate either. Throughout the first five months of 2020, Pandora A/S notes a 20% gain in market value.
No Real Impact for Gold Miners
Contrary to what one may think, this shift will not cause problems for gold miners. Pandora A/S has utilized recycled precious metals for some time now. Today, over 70% of its gold and silver materials are recycled. The company takes up 15% of the world’s recycled silver, a number that is likely to keep increasing.
Until the entire precious metals industry shifts to recycling, however, the remainder of materials will come from regular mines. Production of both gold and silver is expected to ramp up in certain regions. Keeping that in mind, it seems unlikely that demand for “new” metals will decrease by much.